Aims: Obesity is frequent in type 2 diabetic patients with myocardial infarction (MI) or established cardiovascular disease. Earlier studies suggest that elevated body mass index (BMI) is associated with a favorable prognosis for persons with established vascular disease. We sought to analyse the associations between raised BMI and waist circumference with the 2-year event rate in type 2 diabetic patients with established vascular disease. Methods and results: Patients from the Reduction of Atherothrombosis for Continued Health (REACH) Registry, an international, prospective cohort of patients at high risk of atherothrombosis, were selected if they were diabetic and had established atherosclerotic arterial disease (n = 19,579). The main outcomes after 2-year follow-up were: all-cause death, cardiovascular death, MI, stroke, cardiovascular death/MI/stroke, and cardiovascular death/MI/stroke/rehospitalization. The rates of all-cause death, cardiovascular death, and cardiovascular death/MI/stroke decreased across increasing BMI quintile categories, whereas the same rates were stable across waist categories. The hazard ratios, adjusted for confounders, decreased significantly with increasing BMI for all-cause death (p < 0.0001), cardiovascular death (p = 0.0009), cardiovascular death/MI/stroke (p = 0.0004), and all events (p = 0.002), but not for greater waist circumference. Conclusion: There is an apparent obesity paradox (better outcome with increasing obesity) when obesity is measured by BMI but not when measured by waist circumference in diabetic subjects.